Innovation Tax Credit (CII): How Startups Can Maximize This Strategic Financial Advantage
The CII: A Strategic Lever for French Startups in 2024
In 2024, French startups face a dual pressure: innovate fast and preserve cash flow. The Innovation Tax Credit (CII) or Innovation Tax Credit, is a powerful tool to tackle both challenges at once.
Introduced in 2013, the CII is designed for SMEs developing innovative products, without requiring advanced R&D efforts. Think of it as a more accessible extension of the Research Tax Credit (CIR),with simpler eligibility criteria and a stronger focus on market-oriented innovation..
Who Can Benefit from the CII?
The is available to companies meeting the EU definition of an SME:
- Fewer than 250 employees
- Annual turnover below €50M or total assets below €43M
But meeting the size criteria isn’t enough. The product you're developing must be new to marketand deliver a clear functional or technical improvement (e.g. better design, enhanced performance, eco-efficiency).
In other words, you don’t need to reinvent science—just offer a meaningful upgrade over what’s already out there..
Which Costs Are Eligible?
The CII covers a broad range of innovation-related expenses:
- Salaries of R&D and product teams (including social contributions)
- Outsourced services from approved providers
- Costs related to patents, designs, and prototypes
- Expenses for pilot installations and testing phases
Since January 2023, the credit rate has increased from 20% to 30%,capped at 400 000 € in qualifying expenses per year.
Unlike the CIR, external subcontracting costs are eligible even without internal R&D expenses— a major win for startups that outsource their product development..
Why Work With a Specialist?
Many founders assume the CII is easy to claim. And it is… until you're audited.That’s when having a solid, defensible file becomes critical.
That’s exactly why dozens of startups partner with Flag :
- Deep Technical & Tax Expertise
- We understand both the technical eligibility criteria and the fiscal structuring to maximize your credit while minimizing risk.
- Full Compliance & Audit Readiness
- We help you document your expenses, build a strong justification, and prepare a file that stands up to scrutiny.
- Time & Cash Efficiency
- While you focus on building your product, we handle the entire CII process, including optimization with the CIR if applicable.
The CII Can Be Combined With Other Public Funding Tools
The CII stacks well with other non-dilutive funding schemes such as:
- Innovation grants from Bpifrance
- Regional or local subsidies
- JEI (Young Innovative Company) tax statusYoung Innovative Company (JEI) tax status
Bottom Line: Don’t Leave €120,000 on the Table
On average, an eligible startup can recover up to €120,000 per year through the CII. Failing to claim it means missing out and non-dilutive capitalsecure, and equity-free financing.
Book a free call with Flag for an audit.We’ll tell you if you qualify. If it’s a go, we’ll handle the full process for you. Done.
At Flag, we help startups build a high-impact financing roadmap, including:
- Equity fundraising
- Non-dilutive financing strategies
- Innovation tax optimization
- Part-time CFO services
Not sure where to start? Reach out, we’ll walk you through it.
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